Business models are changing in the wake of technological advancement and the 21st-century consumer is all about convenience and options when making a purchase. Technology is providing unprecedented levels of convenience with omnichannels providing retailers with an opportunity to seamlessly carry brick and motor experience online. Improving customer experience is paramount in an increasingly competitive business environment. Increasing smartphone penetration and social media usage is enhancing competitive advantage. Customers value companies and brands that they can constantly be in contact with across different avenues at the same time.
Businesses need to understand how to integrate physical and online stores and comprehend the opportunity cost of both before deciding on the ideal omnichannel strategy. As much as the need to go online is the gospel being preached by most consultants, it is important to note that the downfall of physical stores in most cases is overblown. To gain insights into consumer behavior and a better understanding of the optimum amalgamation of both physical and online stores, a research team led by Xueming Luo, a marketing professor at Temple University, worked with a Chinese department store on its coupon strategy. The research targeted two groups of consumers; those who either exclusively shopped online or exclusively visited physical stores. The goal was to incentivize online shoppers to visit physical stores and vice versa and measure the impact. The research findings concluded that physical stores still play a significant contribution to a company’s bottom line.
In the research, the team noted that trying to encourage customers who exclusively visited physical stores to shop online led to declining profits. However, the team also found out incentivizing previously exclusive online shoppers to visit physical stores increased profits. Increasing foot traffic, in this case, is vital. Shoppers who visit stores are more likely to buy more since it’s hard to compare prices inside a store than doing it online. They are also more likely to add complimentary goods into their shopping basket. These findings validate online retail giant Amazon’s decision to open physical stores. Having physical stores as part of your omnichannel strategy is an added advantage.
Consumer behavior is changing. Business models need to change in tandem with consumer behavior changes in their target markets. Omnichannels are ideal to cater for a large array of consumers and improve customer experience. Conventional retailers still have an edge in the in-store shopping experience and leveraging on this strength while complimenting it with online shopping experience bolsters turnover.
